Thursday, March 10, 2011

Think things are getting hot with the carbon tax debate? Another curve ball lurks just around the corner.

If Rob Oakeshott has his way, the great tax debate is only just getting warmed up. The NSW independent MP sought a tax reform ''summit'' from Julia Gillard as part of his agreement allowing her to form minority government.

She gave it to him because she had very little choice. Of course, this was before the government elected to come at climate change with all guns blazing; the agreement to hold the summit was back in the days when the mining tax was the barbecue stopper, and was to take place before June 30.

Treasurer Wayne Swan has been downplaying the significance of the summit, referring to it as a ''forum'' (denoting a calm meeting of accountants and actuaries with some Tim Tams and fizzy pop). Ken Henry, who has just signed off as the head of Treasury, recently told a Senate estimates hearing that he'd heard (somewhere or other) that it had been put off.

Oakeshott has other ideas. Who cares about the general ''vibe'' of reform fatigue? This discussion should proceed with alacrity. Everything should be on the table, he says - the GST, the carbon price mechanism, all the leftovers from the Henry tax review. ''If we are being fair dinkum, we should have that conversation,'' Oakeshott said.

From the government's perspective, the timing of this broad-ranging discussion stinks.

Tony Abbott is, of course, touring the nation's talkback radio stations prosecuting his ''people's revolt''. A climate change policy debate is now a ''tax'' debate. Abbott might have a very poor climate change policy, but he has won the initial political framing - the government now has the hard task of trying to turn community perceptions around.

That single issue is challenging enough, particularly for a government that has shown limited capacity - in terms of advocating its policies - to walk and chew gum at the same time...

Throw into the mix a gabfest where new fronts can emerge in the climate debate, where various proponents can find a happy home for their wish-lists, and Abbott can make more political hay about new taxes on, say, breathing, and you have a serious headache for Gillard and Swan.

If the government was in control of the agenda there would be no summit, end of story. Given the Parliament has no shortage of issues to occupy its talents, truth is it should be dumped.

But the Prime Minister and her Treasurer are not unfettered masters of their own destiny, and have no such luxury.

Backing out of the agreement would be yet another broken promise. Oakeshott would be angry, and he needs to be kept in the cart.

For this unfortunate sequence of events, the Prime Minister can thank Kevin Rudd and the mining magnate Andrew ''Twiggy'' Forrest.

It was, of course, Rudd who gave his colleagues the 2020 summit - an event that was supposed to be a weekend of photo opportunities with the rich and comely - until the business community named its price for being a captive backdrop: a tax inquiry.

That, of course, led to the Henry review, which led to the mining tax, which in some measure killed Rudd.

The woman who replaced Rudd because he could not win the election then almost lost. She then had to agree to a tax summit and other such inconveniences in order to form minority government.

Cue Twiggy Forrest. Seeing opportunity, as billionaires are hard wired to do, it was Forrest who first convinced Oakeshott and fellow independent Tony Windsor to insist on a tax summit. He jetted into Canberra during the negotiations between Gillard and the crossbench, had a very public sandwich with the two New South Welshmen, and then promptly issued a statement welcoming ''the suggestion of a taxation summit by Mr Oakeshott''.

Oakeshott's office on the day seemed confused by the turn of events, believing the meeting had been primarily about indigenous disadvantage - but there you go

No harm, no foul. Oakeshott and Windsor asked for and were given a tax summit.

The irony is that Forrest now doesn't think the summit is the vehicle for resolving his gripes with the mining tax - he's eyeing the courts.

Twiggy might have moved on, but Oakeshott certainly hasn't - and Abbott hasn't. You can bet he'll be watching.